Brazil's Oil Export Tax in Legal Limbo as Court and Government Clash

Brazil's oil export tax has been thrown into uncertainty after a federal court ordered its suspension, while the government's foreign trade chamber simultaneously approved a 60-day extension of the levy. The conflicting decisions leave the fate of the 12% tax unclear and set the stage for a legal confrontation between the administration of President Luiz Inacio Lula da Silva and oil producers.

The tax, which was due to expire on September 9, was extended by the government's foreign trade chamber, Camex, according to a source familiar with the matter. However, hours earlier, a federal court granted an injunction suspending the levy, as per a decision seen by wire reports.

The duty was introduced earlier this year as part of a package of measures aimed at shielding consumers from higher oil prices following the U.S.-Israeli conflict with Iran and the closure of the Strait of Hormuz. The government argued that revenue from the tax would help fund fuel subsidies for diesel, gasoline, jet fuel, and cooking gas.

The levy has had a significant impact on Brazil's state-run oil company, Petrobras, which paid approximately 4.9 billion reais ($948 million) in export taxes during the second quarter, according to regulatory filings. The suspension could also benefit other major oil producers operating in Brazil, including Shell, Equinor, and TotalEnergies.

The legal standoff means the tax's future remains uncertain, with potential implications for both government revenue and the oil industry's operations in the country.